All You Ever Need To Know Product-Development
All You Ever Need To Know Product-Development
All You Ever Need To Know Product-Development
Product Development
and were too shy to ask
Sold
58,000 in 1958
16,000 in 1959 Ford Edsel nearly bankrupt
Ford in the late 50s
Repeated mistakes in Product Development will
cost the company
Firestone disaster (2001)
22 May:
Ford to replace 13 M Firestone tyres and
take a $3 Bn charge
18 July:
Ford reports $551M quarterly loss
1 Aug:
Ford's market share falls by 22%
17 Aug:
Ford cuts 10% of its white-collar workers
17 Oct:
First consecutive loss in a decade
30 Oct:
Ford CEO Jacques Nasser resigned
Logarithmic scale plot of cost of
change to fix the Firestone problem
$10,000,000,000
$1,000,000,000
$100,000,000
$10,000,000
$1,000,000
$100,000
$10,000
$1,000
$100
$10
$1
Prototyping
Concept Stage
Productionisation
Engineering
In Service
Production
Testing /
Detailed
Cumulative Costs
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
outcome
0%
20%
40%
60%
80%
100%
120%
Concept Stage
C
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S
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Full Scale F
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S
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D
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Development
Committed Costs
T
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/
P
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p
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Testing /
Prototyping
P
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Productionisation
P
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S
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Production
Product Development determines the
Incurred Costs
Service
Superior capability in Product Development will
renew the company and increase its profits over
time
Toyotas PD capability gives it long-
term advantage
Toyota
DOW
VW
GM
Toyotas Programme costs have been consistently 50-75% of European and US car makers
Toyotas PD lead times are nearly half those of European and US car makers
Toyotas Product Quality has consistently been at the top of JD Powers Quality Metrics
Contents
Aerospace Fashion
High Textiles
Major Construction Cosmetics
Food / Drink
Risk
Automotive
Product
Something used by a customer or something sold by an enterprise
Product Development
Flow of activities from identification of market need to production and use of
product
Design
Execution of ideas, manifest in plans to deliver it
One of four fundamental processes
in business
1. Product Development
2. Product Delivery
3. Planning, Execution, and Control: Management
4. Learning
Time
Cost Quality
I/O of Product Development
Creativity
Capital
Further decomposition
People Transformation
Product
Product
Development
Capital Design
Screen 1
??
? ?
??
? ?
?? Development Launch
Pre-development
investigations
Generic Product Development process
Product
Detailed
Detailed Prototyping ProductTest
Test
Design Prototyping Finalisation
Design Finalisation
Process
Process
Process Process
Process ProcessTest
Test
Product Design Development &&Ramp-up
Product Design Development Ramp-up
Requirements Concept Definition Product
Requirements Concept Definition Product
Capture Development && Launch
Capture Development Launch
Approval Supply
Approval Supplychain
chain Supply
Purchasing Supplychain
chain
Purchasing Development
Preparation Development
Preparation
Distribution Market
Distribution Market
Development Preparation
Development Preparation
Product Development cash flow
End of
Life
Product
Launch
Company Market
Dependent Dependent
Product life-cycle
Volume
Sales
Profits Sales
Volume
Profit New Product Profit
Time
Smith and Reinertsens work
DEVELOPMENT PRODUCT
SPEED COST
PRODUCT DEVELOPMENT
PERFORMANCE EXPENSE
Smith and Reinertsens work
Expense Overrun Cost Overrun
3,500,000 4,000
3,000,000
2,500,000 3,500
Expense
Unit Cost
2,000,000
1,500,000 3,000
1,000,000
2,500
500,000
0
2,000
-2 -1 0 1 2 3 4 5
-2 -1 0 1 2 3 4 5
Year Year
Baseline R&D R&D Expenses Overrun Baseline Unit Cost Unit Cost Overrun
5,000 5,000
Annual Units
Annual Units
4,000 4,000
3,000 3,000
2,000 2,000
1,000 1,000
0 0
-2 -1 0 1 2 3 4 5 -2 -1 0 1 2 3 4 5
Year Year
Baseline Unit Sales Unit Sales with Performance Shortfall Baseline Unit Sales Unit Sales with Schedule Delay
Product life-cycle pressures
Revenue
Revenue depressed
by Competitive
Price erosion
Time
Budget
Costs
Operational Costs
Overrun
Start-up Costs
New product J&LR: 1% = $4.5M or 45 man years
development Costs
Timing and impact of management
attention and influence
Index of attention and Influence
Ability to
Influence outcome
Actual Management
Activity Profile
1770s
Charles Babbage: Mathematical treatment of
organisation of production
1840s
management
1900s
GM vs Ford: Emergence of Horizontal Integration
& competition through product differentiation
1920s
First Application of Statistical Quality Control
A. P. Slones application of Financial Statistics
Major developments in industrial
1930s
SPC
TQM
FMS / CIM / CAD-CAM
Robotics
Automation
Process Re-engineering
Focus on lead-times
Japan
United S tates
P R China
G erm any
S outh K orea
Franc e
B raz il
S pain
Canada
India
M ex ic o
UK
Rus s ia
Italy
Thailand
Turk ey
Iran
Cz ec h Rep.
B elgium
P oland
0 2 4 6 8 10 12
M illions
Top 20 vehicle producers (2007)
Toyota
GM
VW
Ford
Honda
PSA
Nissan
Fiat
Renault
Hyundai
Suzuki
Chrysler
Daimler
BMW
Mitsubishi
Kia
Mazda
AvtoVAZ
FAW
Tata
0 2 4 6 8 10
Millions
Top 10 automakers market
capitalisation (2007) p
( Bns)
Toyota 158.2
Honda 54.8
Daimler-Chrysler 47.6
Nissan 41.2
VW 30
BMW 28.5
Renault 25.9
Volvo AB 22.4
Fiat 18.1
Porsche 16.8
Over capacity in global auto industry
90
80
70
Million Units
60
50
40
30
20
10
0
1992 1997 2002 2007
Production Capacity
Trends
Batch sizes
_
1970 1980 1990 2000
Drivers of new product development in
AI
2. Legislation
Concept
Business Product Programme Engineering Production- Product Volume
Feasibility
Proposition Proposition Approval Development isation Launch Production
& Proposal
Time
Time to market for complete new
vehicle
Toyota 38 15
Honda 32 18
Mazda (655) 38 18
Nissan 28 19
Ford/J & LR 51 25
Renault 49 26
DaimlerChrysler 39 28
Concept A
Prod Strategy & Plan
Concept B
Project A
R&A
Concept C
Advanced Design
Concept Concept D Project
Advanced Manuf. Consolidation Decision
Concept E
Project B
Auto Strategy
APC Engineering Concept F
Commercial
Business
Technical
Co-Located Creative X-Functional Team
Input from
Cycle Plan
Potential Show Car
Project C
Output to
Cycle
Plan
Focused On New product Innovation
Process Process
PS - 6 PS
Serial Development
Of Particular Platform Pre-PS Activity
Or Vehicle Programme Commercial
Can Use Business
Technical
Maximising knowledge and certainty
Develop Brand-Specific Aesthetic Create ideas and concepts to anticipate Design program exterior, interior, and under-
Design Language future Consumer requirements the-hood and create CAD geometry
PS PT PTC
PS M1D PA FDJ LR
C CC
Faster CAE
PS PT PTC
PS M1D PA FDJ LR
C CC
Faster CAE
PS PT PTC
PS M1D PA FDJ LR
C CC
Design-in Context
Geometric Compatibility Review
Craftsmanship Appearance Review
Appearance Tolerance Evaluation
Serviceability Evaluations
Manufacturability Evaluations
Package Attribute Evaluations
V0 Concept
V2 Structure
V5 Physical Alignment
V1 Architecture
V3 Tooling
V4 Virtual CP
SI SC PA ST PR CC
V0 Production
CAD DATA LEVEL 4
V1 CAD DATA LEVEL 4
Release
Representative UN content
Feasibility
The start point Process planning
for each activity
Tool Design
Casting/ raw material + pre machining
Tools under
development
Engineering
Delay
By synchronisation of
the complete vehicle
in front of production
releases we get:
Time
Single Point Target
Of Release
Index of attention and Influence Improved PD System
Ability to
influence outcome
Pushing attention to
earlier stages
Actual management
activity profile
Time
Cost Quality
Contents
Concept Creation
(Customer Proposition) Marketing /
Sales
Corporate IPR
Knowledge / Technology
Product Creation
Capability
Criteria for successful new products
People Management
PD
System
Tools &
Technologies Organisation
Product Development capability
PD
Capability
Speed of Cost of
Development Development
Lead-time Constant
Dependent if done to
the best ability
Lean PD
is dependent on Time Compression
PD Capability Metric
Time Compression
i.e. How much can you reduce the lead-time of Product Development
Time
Sources of Improvement
Environmental changes
PD Performance
Process changes
Time
No new Products
=
No future for that company
Effective Product Development
Strategic Advantages
Company Performance
Effective Growth
Product Development Profitability
Sustainability
Operational Advantages
Lowering Costs
Improving Quality
Reducing Lead-Times
Developing Skills
Enhanced Image
Contents
??
Cumulative flow diagram
Cumulative
Quantity Queue
Departures
Time
Monitoring queues
Arrivals Queue
Cumulative
Quantity Departures
Littles
Theorem
Time
Batch size
Arrivals
BATCH TRANSFER
Cumulative
Quality
Departures
Time Queue
Arrivals
CONTINUOUS FLOW
Cumulative
Quality
Departures
Technology Life Cycle
Industry profitability
Number of firms
0
20
40
60
80
18
75
18
85
18
95
Dominant Design
19
05
19
15
19
25
Type-Writer
19
35
19
Auto
45
19
55
19
65
Non-convergent technologies
20
15
10
5
0
74 1970s
75 76 77 781980s
79 80 81 1990s
82 83 84 85 86 87
2000s
Complexity
High Low
Aerospace Cosmetics
Defence Textiles
High Large Buildings Food & Drink
Ship Building Packaging
Jobbing Builders
Risk Automotive
Simple Components
Paper
Volume Consumer Goods
Low Commodity Tools
Conventional M/C Tools
Bulk Chemicals
Pharmaceuticals
Primary Metals
Building Material
Causes of PD Failure
PD
Failure
Poor Idea
Inadequate
Technology Resource Generation
focus Poor
Strategy Planning Not unique
Communication
Marketing
Poor Strategy
Overestimating Technical Long lead time
Lack of Technical Skills
Learning Capabilities Product
Project
Strategy
Screening Low entry barriers
for Competition
52
50.2 KO J#1
50 FPDS
45 43
MPDS V1 40 40
40 39 38
MPDS V2
40 38
35 Toyota 38
30 34
25
20 22
15
S6/A6 S5/A5 S4/A4 S3/A3